Baidu Cuts Revenue Forecast

15 December 2008

BEIJING: China's biggest search engine, Baidu, has reduced its revenue forecasts for the fourth quarter of 2008 by 14%, a move it attributes to the economic slowdown and recent controversy over its sale of paid-for listings to dubious medical companies.

Having previously estimated that Q4 revenues would fall between 1.025 billion yuan ($149m; €112m; £100m) and 1.055bn yuan, Baidu now says this figure will be closer to 890m-900m yuan.

Baidu holds a near-70% share of the Chinese search market, but recently saw its stock price plummet after it was found to be selling search terms to unlicensed medical and pharma companies.

Analysts estimate that revenues from these firms provided between 10% and 15% of its income.

Alongside removing the listings for these such sites, the search engine has now delisted "a number of questionable paid search listings outside of the medical and pharmaceutical sectors".

It is also working on a new search system which clearly demarcates paid search and organic results as part of an effort to "improve user experience", having previously argued that combining these results was central to its revenue streams.

Data sourced from Financial Times; additional content by WARC staff